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Posts tagged ‘Pm Modi’

So when does hubris — the corrosive comfort of undiluted power — overtake a government? Conventional wisdom points to three early red flags. First, when routine tasks are ignored for grand ambitions. Second, when party cadres act out of entitlement rather than commitment. Third, when rant replaces reason as public outreach. Has this already happened to the BJP government?

Ignore routine tasks at your peril

First, consider the recurrent trail of routine lapses. Take the embarrassment in July of being unable to get the non-controversial bill to give constitutional status to the Other Backward Castes Commission passed in the Rajya Sabha because BJP MPs did not even bother to attend in sufficient numbers. There is no glory in floor management. Ergo, it gets overlooked. Next, consider the election of Ahmed Patel to the Rajya Sabha from Gujarat. The strategy to keep him out was brilliant. But shoddy execution, or worse, deliberate sabotage, let down the BJP. Finally, the mass death of children in a Gorakhpur hospital. The hallmark of the RSS has been effective management during emergencies and disasters. That oxygen cylinders couldn’t be swiftly organised speaks volumes of how low the cadres have sunk.

Rulers can’t ignore the Rule of Law

Second, consider contempt for the rule of law. Mohan Bhagwat, the RSS supremo, violated the law in Kerala by unfurling the national flag, on Independence Day, at a school in Palghat, contravening a restraining order by the district collector. The order was perverse, based on pique and politics rather than prudence. The manner of its service — just prior to the occasion — was hurried and amateurish. But it was a legal order and anyone violating it is liable to be arrested. Mohan Bhagwat got away. But the lesson he taught the schoolkids and party cadres was that no law is sacrosanct if you are powerful enough.

Gandhiji would not have approved. Disobedience of an unjust law is fine, if followed by submission to its consequences, under the rule of law.

This contempt for the law is visible in the cadre vigilantes protecting cows, supporting unruly, disruptive religious yatras and the demonisation of alternative voices. Add to that, the raging testosterones of a BJP “princeling” in Haryana and you have party cadres which align more with gaali (abuse) and goli (bullets) rather than the galle lagana (hug) that Prime Minister Modi has espoused as the leitmotif of New India. Third, let us consider why no one came away inspired from Red Fort this year.

Outreach by high decibel rote no substitute for passion

The Prime Minister’s speech was a prime example of zombie behaviour, where the mind is elsewhere but the motions are acted out. The wide ramparts of Delhi’s historic Red Fort have set the stage for Prime Ministers to grandstand every year since 1947. Two (Lal Bahadur Shastri and Morarji Desai) barely had a chance to give a second speech before they were gone.

Four others (Charan Singh, V.P. Singh, H.D. Dewe Gowda and Inder Gujral) were even more transient, managing not more than a single speech each from Red Fort. One — Rajiv Gandhi, a young, stunning-looking charmer — was suddenly elevated to the position but never quite unbuckled the pilot’s seat he used to occupy earlier. Manmohan Singh had a decade to hone up his act. But he knew that he was a mere seat-warmer for the Nehru-Gandhi dynasty — having been taught his lesson earlier, when party workers sabotaged his election bid to the Lok Sabha. P. V. Narasimha Rao — a friendless, private man was not given to making big public gestures from the Red Fort. His political games were deadly effective, but played entirely in privacy.

Nehru, Indira Gandhi and Narendra Modi are the only three Prime Ministers who have had the mandate and the charisma to use the ramparts to strut their act. Mr Modi thrilled us in 2014 with his energy and his earthy enthusiasm at reaching out to people — quite a change from the taciturn Manmohan Singh or the imperiously distant Sonia Gandhi. In 2015, he filled in the vacant spaces in his act with data, slogans and acronyms. We were impressed. In 2016, we were still agreeable to look kindly on him, given that the economy was racing along and government performance was projected as trending sharply upwards.

By 2017, the act was flat as yesterday’s soda. This is remarkable considering that Indian testosterones are racing at the government effectively holding off the Chinese muscle-flexing at Doklam and now in Ladakh; Pakistan is reduced to being a mere vassal of the Dragon and economically hollowed out Western powers are fawning at our doors for Indian business.

International acquiescence has bred much-needed confidence. But it is disquieting that in domestic policy it has led to complacence, drift and distance from the public. Mr Modi’s speech was rambling, glib, unnecessarily argumentative and just plan stale. The turban was way too shiny to be classy. The stance too casual to be purposive. The look too staged. Very confusing was the discrete use of the terms — Bharat, India and Hindustan.

Bharat, India or Hindustan?

Hindustan was used in the context of pledging support for the victims of the irresponsible Muslim practice of triple talaq. Bharat was referred to as the mata (mother). But it is New India that we seek to build. Meaning?

Bharat, India or Hindustan, all three remember earlier episodes of hubris — disconnects between reality and rhetoric — which ended badly for us. In 1964, we discovered, too late that India needed the world, not the other way around. In 1975, we realised Indira needed India, but we didn’t need her. In 2017 (Delhi municipal and Uttar Pradesh elections), a shallow social revolution met its downfall. In 2004, we tired of using the stock market as a metric of progress. The metrics proposed for New India are similarly flawed. Corruption, poverty, filth, early death and unemployment are long-term outcomes, unachievable by 2022.

Focus on the essentials, Mr Prime Minister: Ending poverty by providing jobs and social security; improve results in education and health; build infrastructure for the 21st century and professionalise your government. We supported you in 2014. We want to do so again in 2019. But is your party up to this task?

Adapted from the author’s article in The Asian Age, August 17, 2017 http://www.asianage.com/opinion/columnists/170817/is-a-sense-of-hubris-slowing-down-modi.html

Presidential elections in India are a ho-hum event for the average citizen. At best, this is a moment when the government “signals” its political identity or its governance style. The BJP-led NDA government has succeeded in the former but not the latter.

The ruling party’s biggest nightmare is to nominate a candidate who loses. This is not only egg on its face, but it opens a Pandora’s box of future antagonisms between the government and the head of the state. It has never happened thus far. But it is wise to budget for minimum risk, especially when the upside of having “your own man (only one of thirteen Presidents has been a woman) in the Rashtrapati Bhawan are limited.

The Constitution severely limits action, independent of the government, by the President. But the potential for being deviously obstructionist exists. James Mason — the distinguished political scientist — credits Babu Jagjivan Ram – the original dalit face of Indian politics – with the insight of how to do a “Putin” in the Indian context and acquire covert, unconstitutional political power. The only redress against a malevolent President is to impeach him in Parliament. Whilst theoretically possible, it requires a two-thirds majority. That is tough if the President is politically savvy and actively conspires to defeat the motion, including by requesting MPs to merely abstain from the vote.

Unrealised political ambition is not an asset for being President

In the heady days after Emergency was lifted, the Janata government — a loose coalition of political interests, opposed to the authoritarian rule of Prime Minister Indira Gandhi — came to power. But it splintered. Prime Minister Morarji Desai lost his majority and resigned. Y.B. Chavan and Charan Singh sequentially failed to build their factions into a majority. President Neelam Sanjiva Reddy (1977-82), instead of giving Babu Jagjivan Ram — leader of the largest rump of the Janata Party — a similar opportunity, dissolved the Lok Sabha and ordered fresh elections. This was, at best, presidential over-reach to force an early conclusion to the drift. At worst, it was intentionally muscular, to induce an election, in anticipation of an uncertain outcome, which would allow then the President to manoeuvre and put a “pocket” government in power.

Petulance can warp Presidential efficiency

Later a petulant President Zail Singh (1982-’87), a “trusted” political follower of Indira Gandhi, used obstruction as a mechanism to show his annoyance at being politically ignored by the debonair, apolitical Prime Minister, Rajiv Gandhi, who stepped into his mother’s political legacy, but wanted no part of its earthier political roots.

Ego is a killer for normative functioning by the President

President K.R. Narayanan (1997 to 2002) was a “working President”. Nothing was further from his intent than subverting the Constitution. In fact, he felt a heightened sense of responsibility to keep the ship of state credible and morally enlightened in the face of unstable minority governments. He possibly felt, albeit unwisely, that the President, being elected by an electoral college much wider than the Lok Sabha, had a stronger, deeper representativeness. He was also decidedly uncomfortable with the BJP holding the reins of power — a hangover from the post-Independence demonisation of the Hindu right-wing party. This mutual distrust led to his public speeches and media interviews being interpreted as being critical of government policy. He departed from his prepared and vetted speech at a state banquet in New Delhi and seemed to hector President Clinton of the US – the chief guest, on the proclivity of great powers to play “headman”, quite contrary to the government’s intentions.

The game is rigged so that nominees of the Union government win elections

The process for Presidential elections is constitutionally rigged in favour of the Union government. The Lok Sabha, where every Union government has a working majority, has a vote share of 35 per cent. The Rajya Sabha — where the government, like the present one , may not have a majority – has a smaller vote share of 15 per cent. State legislative assemblies have an aggregate vote share of 50 per cent. But the weight for each state Legislative Assembly varies and is indexed to its population. Just 10 of the most populous states — out of a total of 31 states — together have a 37 per cent vote share in the electoral college. An MLA from Sikkim has vote value of seven versus 208 vote value that an MLA from Uttar Pradesh commands. This is one reason why political parties go all out to capture elections in state legislative assemblies.

Union governments have traditionally played safe and fielded nominees whose reliability trumps their candour. Political placidity is preferred to ambition. Being of an age close to permanent retirement is a key qualification.

President elect Ram Nath Kovind – the perfect fit

Ram Nath Kovind, the BJP’s nominee and the 14th President of India, is a perfect fit. He is non-controversial and low-key. His Hindutva beliefs seem to be personal rather than aggressively political. Like President Narayanan, he is a dalit and hence a symbol of continued dalit empowerment. He is the first President from Uttar Pradesh — the most populous Indian state with the largest population of Scheduled Castes. His election reiterates that Uttar Pradesh, Prime Minister Narendra Modi’s adopted karam bhumi, remains close to his heart.

Thus far the average age of Presidents, at the time of election, has been 71 years. Mr Kovind is right on the button being 71 years of age. The youngest at 64 years was President Neelam Sanjiva Reddy. His subsequent actions reiterated that unrealised ambition is not an asset for this position. But age alone is no assurance of placidity.

K.R. Narayanan — never “a rubber stamp President” — shares the honour of being the oldest at 77 years, with R. Venkataraman (1987 to ’92).

Ironically, 81 per cent of India’s population is less than 44 years of age and 97 percent was born post-Independence. But all our Presidents have been from the pre- 1947 colonial period. It doesn’t need to be that way.

The minimum age to be elected President is 35 years. But till we effectively depoliticise the presidency, by defining a code of conduct with detailed guidelines for presidential action (an Indian Magna Carta), the potential for youthful ambition to seize power covertly, will dissuade governments from taking the risk of electing a youthful, erudite President, as the face of Bharat which is India.

An opportunity lost for being transformative

The government has played the “minimum-maximum” game to perfection. The irony is it didn’t need to do so. This was a low-risk opportunity to reinforce its commitment to cooperative federalism and to broaden the ambit of governance by pulling in apolitical talent. At the very least, it should have tried harder and negotiated in good faith, to get President Kovind nominated by all parties, rather than making him contest an election. Admittedly, there is no political tradition urging it to do so. But Mr Modi did not start out trying to be a template Prime Minister.

One hopes he will resist the institutional incentives to lapse into a transactional, rather than his earlier, transformative mode.

Adapted from the author’s article in The Asian Age, July 21, 2017 http://www.asianage.com/opinion/columnists/210717/template-rashtrapati.html

In a welcome change of national focus, becoming rich is no longer enough unless the poor are taken along. Prime Minister Narendra Modi, who is very au fait with international headwinds, was prescient in his December 31 address. For the first time, it was not the youth, nor non-resident Indians, nor Hindus, that the PM was focusing on. His attention was primarily on the travails of the poor. He donned the mantle, first evoked by Prime Minister Indira Gandhi four and a half decades earlier in 1971, of a pro-poor proselytiser.

Recovering lost ground

Speaking in the shadow of the economic storm unleashed by the demonetisation of 86 per cent of the currency in November and December 2016, Mr Modi extolled the poor for their patience and resilience. They had shown, he said, “…even people trapped in poverty, are willing to… build a glorious India… through persistence, sweat and toil (they), have demonstrated to the world, an unparalleled example of citizen sacrifice.”

The finance minister would do well to gauge which way the wind is blowing when he rises to present the fiscal 2017-18 Budget on February 1. It is not as if the poor were ignored in the earlier three Budgets presented by him. But they only figured tangentially. Growth, macro-economic stability, infrastructure and jobs for the middle-class young, the usual Davos consensus, took pride of place.

A sombre 2017 ahead

We face a sombre fiscal year ahead. The International Monetary Fund’s economic outlook — a source the finance minister has used previously to highlight India’s outlier growth performance since 2014 — has projected a growth of only 6.6 per cent in 2016 — one percentage point less than the 7.6 per cent estimated pre-demonetisation. Worse, even growth in 2017 at 7.2 per cent will suffer. Even this is dependent on the shock being temporary. The subtext is that if the ongoing jihad against corruption is extended indefinitely and indiscriminately, business sentiment will collapse. Corruption is a curse. But it must be tackled surgically by an army of savvy saints, who are hard to find.

Lower growth in 2017 would reduce tax revenues. Hopefully this can be compensated by taxing some of the Rs 4 trillion, suspected to be dodgy money, deposited in banks during demonetisation.

Sops only for revenue and economic return multipliers

This stash should also encourage the finance minister to take the risk of slashing income-tax rates to boost revenue through better tax compliance and boost demand. The maximum tax rate for an annual income between Rs 25 to Rs 50 lakhs should be 15 per cent (current rate 30 per cent), with suitably lower rates for lower income slabs. The tax on income between Rs 2.5 to Rs 10 lakhs should be broad-banded at five per cent (current rate 10 to 30 per cent). Tax studies show that the revenue dividend is more pronounced by reducing tax in the lower income slabs. This is probably because the proportionate cost of evasion reduces at higher income levels so it is tough to beat. High income wallahs tax arbitrage internationally via corporate earnings. So, they declare domestically only enough to justify their easily verifiable lifestyle and assets.

Lower growth also red flags the fiscal deficit as a percentage of GDP, which acts as a cap on public borrowing to spend. High fiscal deficits can lead to inflation and public indebtedness. But courtesy demonetisation money is cheap. Banks deposits have swelled by Rs 6 trillion since October 28, 2016. This is low-interest money waiting to be used by the government and its assorted entities. Inflation is well below the target five per cent. This presents the option for temporarily breaching the fiscal deficit target of three per cent for 2017-18 to infuse income into the poorest households.

Rich farmers, poor workers

Sops for agriculture are falsely conflated with poverty-reduction objectives. Admittedly, investing in agricultural growth is an efficient strategy for reducing poverty. Eighty per cent of the poor live in rural areas. But this is too blunt an approach.

Fifty-four out of 180 million rural households (30 per cent) own no land and survive on manual labour. Benefits from agricultural growth are indirect for the poor. Scheduled Castes, Tribes and Muslims are overrepresented in this group. They need instant relief. Consumption loans of Rs 20,000 for each household, deposited into bank accounts, repayable by labour in village improvement schemes, can combine the advantages of a direct benefits strategy, coupled with the self-selecting benefits of the National Rural Employment Guarantee Act programme. This requires an allocation of Rs 1 trillion — three times the NREGA allocation. This would be a fit use for the demonetisation windfall.

Neo-middle class vulnerable to sliding back into poverty

But income support is a short-term mechanism to reduce poverty. The World Bank assesses that the Indian growth strategy, whilst effective in pulling people out of poverty, is less effective in keeping them out of poverty. By 2012 poverty levels were down to 22 per cent, from 45 per cent in 1994. But an astonishingly high 41 per cent in the neo-middle class were vulnerable to sliding back into poverty. Even in the go-go years (2005 to 2012) around seven per cent of the neo-middle class slid back into poverty. Sudden economic stress, like the loss of jobs, can significantly increase this proportion.

Reduce multidimensional poverty through better services

Vulnerability to sliding back into poverty can be fixed if the poor get steady jobs, which are more likely if they are educated. Shocks to household budgets can be mitigated by access to healthcare. Nutrition can be improved through clean water supply and sanitation. Lower tax on low-income earners reduces the effective cost of labour versus capital, making labour competitive in the formal sector. Public services, which reduce the multidimensional index of poverty, can be ramped up by the private sector, if the government provides viability gap funding.

Junk low economic return schemes & protect the poor from shocks

India can be on track, to meet the interim sustainable development goal of reducing the level of extreme poverty to nine per cent by 2020, if we safeguard growth and cocoon the poor from shocks by providing access to better public services. The finance minister must identify the allocations specifically for the core objectives and discard the chaff generated by the testosterone of high growth.

Adapted from the authors article in Asian Age January 20, 2015 http://www.asianage.com/opinion/columnists/200117/safeguard-poor-bring-india-back-on-track.html

The Election Commission has expectedly kicked the “postpone the budget” ball -rolled out by the opposition- to the government for comments by January 10. This is smart, because it offers the government an exit strategy from the ill-conceived plan to fast forward the budget to February 1 just two days before the elections in five states.

Best to play ball with the EC

Chief Election Commissioner Nasim Zaidi: smart move

The government could demurely say to the EC that it is willing to defer to any decision the EC takes. The priority is that the Code of Conduct – which kicks in, once the election schedule has been notified- should be safeguarded. This would free the EC to direct that the budget session be held after March 8 when polling ends in all states.

Alternatively, the government could stick to its stated stand that a national budget process is not barred by state level assembly elections being in progress. This stance would require the EC to shoulder the gun itself. Discretion being the better part of valor, the EC may decide to go strictly by the legalese.

The second option of playing obdurate is bad for the government and bad for the EC. For the EC, going by the letter rather than the spirit of the law would be viewed as caving-in to the government. This would erode its institutional credibility, so assiduously built by successive commissions, since the times of Mr. T.N. Seshan Chief Election Commissioner in the early 1990s.

From the government’s perspective, a budget session under the present circumstances would be an embarrassment. The opposition would surely disrupt the session with protests and walk outs. Getting a budget passed with the opposition absent under protest, is technically possible and is an oft adopted stratagem at the state level. But it bodes ill for post budget collaboration around the still hanging Goods and Services Tax as was illustrated recently by the West Bengal Finance Minister walking out of the pre-budget discussions.

Sans a post “notebandi” database forecasts are meaningless

More importantly, a budget session based on fiscal data prior to November 2016 seems meaningless. Demonetization was the biggest, internal economic shock in recent economic history. Even the Governor, Reserve Bank of India has reportedly gone on record before parliamentary committees that the after-shocks of demonetization could linger on for some time more and are difficult to assess today. Budgeting becomes a valueless sham under conditions of near-term, severe macro-economic uncertainty.

Far better instead to opt for a Vote on Account. This stratagem would allow tax collection and expenditure to carry on unhindered on the same basis, as in the current fiscal year during the first quarter of the next fiscal year – 2017-18. A full budget could then be presented, debated and passed during this period.

There are several virtues in acceding to the demand of the opposition parties to postpone the budget.

Government must behave like Caesar’s wife

All party consensus on the fundamentals of democracy is the bed rock of productive inter-party collaboration. Ensuring free and fair elections is one such principle. One aspect of inter party equity is the imposition of reasonable restraints on the party in power to avoid the possibility that it may woo voters from its vantage point of access to state resources and institutionalized forums for policy making. Part VII of the EC’s Code of Conduct details do and don’ts. Admittedly, the restraint is primarily on the party in power in the concerned state and not on the national government. But India is a Union of States and not a federation, unlike the US. The central government here has a dominant fiscal and functional profile. State governments survive under the shadow of the central government.

The simple fact that the budget is proposed to be presented on Feb 1 just two days before polling on Feb 4 in Punjab and Goa must give us pause. The central government must act like Caesar’s wife and be above reproach. This is not to say that the central government is sure to misuse the budget for partisan ends. But why let doubts fester and poison the political environment?

Battling economic uncertainty needs collaboration

The world and India, are poised on the edge of a calamitous economic precipice. Falling off the cliff is a distinct possibility. Every economy is hunkering down for an economic slowdown and India cannot go unscathed. This requires all political parties to pull together rather than work at cross purposes. Prime Minister Modi said as much at the Patna, Guru Gobind celebrations last week, in the context of wide support being a prerequisite for fundamental reform.

Co-operative federalism began well in 2014 but the flower has withered remarkably quickly since then. Despite the economic setback from demonetization the BJP holds all the cards going forward over the next two years.

CJI Khehar’s productive approach to unfair fingering

Why not take a leaf from the dignified way the new Chief Justice of India J.S. Khehar behaved? He was confronted, in court last month, by the allegation that he should recuse himself from hearing the case regarding alleged corrupt practices by PM Modi as Chief Minister of Gujarat, because his appointment as Chief Justice was awaiting the approval of the Prime Minister. The allegation was unseemly. Being the most senior judge in the Supreme Court, Justice Khehar’s elevation as CJI was a routine matter. Not elevating him would have raised eyebrows rather than doing so. Despite being visibly upset Justice Khehar simply said he was pained by the lack of confidence in him by the senior lawyer but was willing to recuse himself. One can never going wrong by following the code of Caesar’s wife.

Calm ruffled egos and revive hope

Maybe the government should take a leaf from the CJIs book. Why stir up a political storm when nothing much is at stake around presenting the budget under an advanced time frame on February 1? Alternatively, why not learn from the babus? They bow low to rise high. Either way, the priority is to soothe troubled spirits not to create new storms in tea cups.

Weird as it may sound, despite the rhetoric around innovation and private entrepreneurship being key for growth, this is not the consistent message emanating from government policy and regulations. Here are three examples.

Ideological neutrality versus enlarging access to the internet

First, consider that TRAI caved-in, in February 2016 to the “shrill voices” demanding that Facebook/Internet.org be stopped from offering free basic (limited) internet. The wooly thinking behind this decision was that Facebook- a deep pocket player- could thereby lure users to the Free Basics site- dubbed by activists as a walled garden, from which there would be no escape. Customers would be so entranced by the scented garden, that they would never wish to explore anything beyond the limited products on display within. This may have pleased Facebook- the description of Free Basics closely matching what heaven must be like- but they upped stakes and left.

Foreign companies make easy targets

Most likely Free Basics, a foreign venture, was just an easy target. TRAI probably played to the home grown, software industry – represented by NASSCOM- which was up in arms against the foreign interloper. But it is the consumer who lost out- particularly those at the margin of attaining internet access. These millions could have been in a free walled garden. Today they continue to wander through the dust of an internet less but limitless, real desert.

The economic cost of banning access to free basic internet

ICRIER, a Delhi based think tank, is assessing the economic cost of not providing internet access through a nineteen state survey. Preliminary assessments show that there is a significant increase in GDP by adding more users to the internet. The, un-confirmed, upper-bound assessment could be an astounding additional GDP growth of around 2.5% if the number of internet users are increased by 16%. This is exactly what Free Basics would have done. But they have been thwarted by rules, which adversely impact competition, jobs and wealth creation via innovation.

Sadly, this is not the only example. Yet another instance of rules which increase the transaction cost of doing business for innovators, rather than reducing it is the new FDI regulations permitting 100% foreign equity in e-commerce market platforms. Whilst the relaxed FDI limit is progressive, the additional constraints it comes with are not. One condition is that no supplier should have more than a 25% share in sales on the platform. Another condition is that the market platform must not influence retail prices.

e-market platforms are not stock exchanges

The government’s conception of an e-commerce platform seems to closely resemble a stock exchange, which is hands off aggregator and facilitator for matching demand and supply. Why then would we need more than one such e- commerce platform – since profits lie in scaling up operations? God forbid if the next step is to specify that the market platform must be co-operatively owned by all the suppliers.

Lip sympathy for bricks and mortar retailers

The underlying concern behind the restrictive concerns seem be that e-commerce market places should not disrupt the business of stand-alone bricks and mortar retailers by offering deep discounts, using private equity funds, to grab market share. True private equity driven scaling up can bankrupt inefficient and under- funded retailers. But isn’t it in the nature of business to remain efficient via disruption? Government needs to concern itself not with the fortunes of individual businesses but the aggregate health of the retail sector- employment and customer services provided. Instead of protecting individual jobs, government must grow the total number of jobs recognizing that innovation- by definition, is disruptive of the status quo.

In any case rules to artificially maintain the status quo are rarely effective. They can be undermined and evaded. That is not the concern. The real concern is the adverse impact, that impractical rules have on the innovation eco-system. Innovators and their financiers, expose themselves to enormous business risk. The last thing they need, as an add-on transaction cost, is the risk from uncertain regulation.

Why extend the broken business eco-system of legacy industries?

There is also the issue of the attracting the wrong kind of innovators and private equity- those who are adept at working within a tightly regulated regime using the nod-wink approach to compliance with rules. This was a key qualification for doing business in India earlier. It should not be allowed to become the norm in e-commerce also.

We acclaim IIT/IIM graduates who are courageous enough to start their own e-business. But why tie their hands behind their backs from the start by forcing them to be dishonest; by requiring them to innovate a business model which will hood wink the law. And what about the potential risk that these illogical regulations may be tightened further. For example, prescription of rigorous tests for a Chinese wall between the e-market platform and the suppliers with respect to shareholding; a ban on inter-company loans from cash rich platform developers to suppliers to avoid the short circuiting of the discount ban by setting up shadow, intermediate whole-sellers between the market platform and the actual suppliers.

Most importantly, the desire to tick the box on allowing 100% FDI in marketing platforms whilst mollifying the lobby of bricks and mortar retailers, has derailed the existing eco-system for innovation in e-commerce. Rather than getting out of their way, the government has ended up increasing the potential nuisance from the new regulations. This is not a healthy environment for promoting innovation.

Remember the boom in private IT and telecom business?

The spectacular IT growth since the 1990s was the result of facilitation rather than intrusive regulation. Similarly, the telecom industry grew exponentially post-2000, because the quality of regulation was light handed and promoted competition rather than intrusive regulation of business processes and pricing of retail services.

Electricity – the limitations of intrusive regulation

In sharp contrast, the electricity supply industry has intrusive cost of service based retail price regulation. The results are before us. Despite three separate schemes, since 2000, to restructure the stressed loans of electricity distribution companies, they still comprise a quarter of the non-performing assets of public sector banks. Whether privatization of electricity distribution in 2000- as was envisaged then- along with liberalization of the energy supply chain, could have had happier results, is in the realm of speculation. But intrusive regulation has not helped one bit in restoring the sectors health.

The consistent lesson is that less government is better governance. This was PM Modi’s rallying principle. One only wishes that he would make someone, who has his ear, responsible for alerting him every time government departs from this golden rule.

Like this:

The latest public “dog and pony show”, unveiled on Thursday in Delhi, is the selection of 20 cities across the richest 11 states of India for accessing the governments Smart Cities fund.

Photo credit: smartcitiesindia.com

The near-complete exclusion of the poor “cow belt” states, except Rajasthan and Madhya Pradesh, can be explained by the need to first push public money to where elections are to be held in 2016 — Assam, Punjab, Tamil Nadu and Kerala — West Bengal being a surprising exclusion.

But what takes the cake is the inclusion of the New Delhi Municipal Council (NDMC), comprising just three per cent of Delhi’s area, which is directly administered by the Centre. The Central government owns nearly 90 per cent of the 44 sq km it comprises with marginal ownership in and around the prestigious Lutyens’ zone of power brokers, lobbyists, old-economy business people, big time realtors and other hangers-on of this rarified ecosystem — the Indian equivalent of the Washington DC Beltway.

Lutyens Delhi a lush, green bubble in the heart of the capital. photo credit: indiatravelite.com

The NDMC is already a profitable municipality, as indeed it should be. It spends over Rs 3,000 crore ($450 million) every year on serving just 300,000 people — a per capita expense of Rs 1 lakh ($1500) per resident, per year. Compare this with the average spend in the other three municipalities of Delhi of just Rs 7,300 ($110) per capita per year — all currently managed by the Bharatiya Janata Party. More starkly, the average spend for all urban areas, across India, is a shockingly low Rs 1,000 ($15) per capita per year.

Why is the selection of NDMC for yet another barrel of “pork” so disappointing? Three reasons strike out:

First, that this should happen days before the “reformist” budget expected to be presented by the Union minister of finance for 2016-17 is unnerving. The budget is, or should be, about spending public money well and wringing out the maximum public value from it. Allocating subsidies to the rich cannot be part of a pro-poor paradigm. It symbolises all that is wrong with a bureaucracy which is all “spin” and no heart.

Second, the bane of China style “big government” has been soft budget constraints and poor accountability. Big budgets lead to profligate spending. Bureaucrats are more interested in shovelling money out of the public door into private pockets and marking up their “performance” sheets, than in ensuring that the money is spent in areas where growth and poverty reduction can most be impacted. The casual allocation of Rs 500 crore to the richest local body in India, with the highest per capita income, just so that it can shine even better, speaks of a pernicious tendency in new public financial management to mimic private finance by allocating money where it can be quickly absorbed, rather than risk it where it would create the maximum social and economic value.

Third, it is no one’s case that redistribution of wealth can be done by pulling down those who are well off. But Reserve Bank of India governor Raghuram Rajan’s recent diatribe against the lack of public concern about the optics of vulgar displays of wealth strikes a chord.

Lutyens’ Delhi is the “Kohinoor” of Delhi. A small self-absorbed bubble of power, privilege and wealth. One acre of land here costs Rs 500 crore and sales happen rarely. Why can’t the power elite pay for the privileges they enjoy? Why is it so difficult to convince the 4,000-odd large private property owners — each with a minimum net wealth of at least Rs 100 crore — to pay for retrofitting their beautiful municipality? Isn’t that what participative governance means? Why must poor Trilokpuri in east Delhi comprising the marginalised, poor and the shabbiest of public services pay for keeping Lutyens’ Delhi shining?

Trilokpuri, East Delhi, a festering sore where only the marginalized exist. Photo credit: Indianexpress.com

Had Thomas Piketty been part of the Smart City selection committee he would have torn out his hair in a fit of Gaelic rage at the callousness with which public money has been wasted and inequality worsened. What indeed was the selection process which has generated such a warped result?

The allocation instrument is a “challenge fund” devised by the usual suspects: Fly in, fly out consultants. As expected, on paper, the process appears transparent and efficient. It is a beauty contest. Municipalities send in their proposals seeking Central government funds for up to Rs 500 crore ($75 million) over four years. But they must match the Central government allocation and also meet the criterion of performance efficiency which includes standard metrics like collection efficiency, proactivity, etc. Nothing wrong with that at all. The killer is that there is no criteria on what impact the project will have on reducing urban poverty or on reducing the depth of deprivation in access to basic public services in poor localities.

Is it any surprise then that the Smart City fund is merely ending up elevating the “boats” which are already afloat? And how is that so different from the infamous National Rural Employment Guarantee Act (NREGA) of the United Progressive Alliance, which similarly incentivised the ability to use funds quickly? Rich states like Tamil Nadu, with average informal wages way above the national average national, quickly pulled out most of the funds, whilst the poor, badly organised states faced an empty treasury by the time they got their act together. As before, the mightiest wins yet again.

Political pork, lazy bureaucrats, the use of public funds for private gain by the elites is all old hat in India and across the developing world. Nothing new in that. The pity is that it needn’t be this way. The anguish is that old style cornering of public funds with no regard for ensuring equity, persists like a deep-seeded rot.

Prime Minister Narendra Modi of all people, should know the negative feeling generated from being excluded by the establishment. He must have experienced the chagrin of public money being wasted on “gilding the lily” whilst millions of poor children, like him, had to make do with a subsistence existence. Or is human memory so frail that one quickly forgets the bad times? Former Prime Minister Manmohan Singh was fond of establishing his humble roots by saying that as a child he studied under the village lamp post. But in the 10 years that he was in power, millions of children continued to study in exactly the same way.

The preoccupations of the “Delhi Durbar” are pretty compelling. That is why they say you can wear a crown in Delhi. But don’t sleep easy — it isn’t permanent.

The lonely statue of King George V after it moved from under its domed canopy in India Gate – since awaiting another incumbent-and relegated to a museum.

Adapted from the authors article in Asian Age January 30, 2016http://www.asianage.com/columnists/exclusive-cities-715

You have to hand it to the French. They look effortlessly stylish- think Christine Lagarde, the French Managing Director of the IMF.

Even when they wear plain work clothes they come encased in an inherited frisson of elegance- the 1789 French revolution, it seems, diffused aristocratic elegance more evenly rather than destroying it all together, as in Russia. But scratch the coiffed surface and an au natural savage surfaces, readily comfortable with the oddities of humanity existence – cigarette smoke, food smells, passions and emotions. This being the one real French connecion with India.

It is not surprising them that art, fashion and spiritualism constitute areas of instant rapport between Indian and France.

Indian artists- Amrita Sher Gill in the early part of the 20th century; Fashion and art ace photographer Prabudda Dasgupta towards the latter half;

and current enfant terrible of the fashion world- Manish Arora all made Paris their karambhoomi (home away from home)

But art and fashion were far from President Hollande’s objectives. So what were the first impressions from his three day, Indian safari

It must have struck him that there is no easy familiarity between the French and Indians. It goes beyond the language barrier. At the heart of the difference is the romantic, liberalism of the French, naively combined with a deep allegiance to preserving their culture. In India, traditional ways are so deep a social barrier for two thirds of Indians that the great hope is for rapid urbanization and industrialization to erode the embedded biases against women, the poor and the marginalized. Disruption rather than continuity is the order of the day in India today.

Too shy to Bhangra?

This difference showed, he must have ruefully thought. There was no spontaneous affection between the visiting French and the Indian people, unlike, he ruefully pondered, what was powerfully on display when Bill Clinton danced the Ghoomer with Haryanvi villagers in 2000. Nor did the French capture hearts and minds, in the manner Michelle Obama did last year, with her ready laugh and radiating warmth.

The French are formal people and their Presidents do not go around grabbing babies or unknown dancers. The familiarity never extends beyond a glacial airbrush, double kiss. Elegance, grace and exclusive glamour is the French game and it was played well, in Delhi, as President Hollande supped with the beautiful people.

But the President banished such negative thoughts as he slipped off his shoes- hopefully made in France, unlike his spectacles. Sinking into the warm familiarity of his customized Airbus A 300-200, whilst reaching languidly for his favorite seafood aperitif and a well-deserved glass of French wine, he rooted around for “learnings from India” as all diligent leaders must.

The brooding edifice of the Indian state

His overriding emotion was of envy at how solidly the State is in control in India and how deeply stabilizing is the role of our elites. Delhi, a city state of 10 million people was effortlessly turned into a fortress by 60,000 security personnel. It worked without a hitch. Compare this with Paris, where even his delegation may have had difficulty in getting a cab back home on arrival, because taxi drivers were on strike against the ubiquitous Uber’s entry into France. If only, the President must have thought, I had more Indians in France, things would work better.

Illusions are the reality

Second, he brooded over the new Indian Rope Trick by which diversity and tradition are kept alive as a fond memory- a static picture in the head- whilst the real life incentives are all to become part of a national mainstream. The colorful floats, the folk dancers and the serried rows of soldiers- all marching in age old regimental silos in a manner reminiscent of 19th century India- all serve to highlight that they have transcended traditional cleavages. That their nationalism is not about one dress; one food; one drink, one language. It is something deeper and visceral. The President shook his head. Such flippant, multi leveled, varied allegiances to social norms would never do in France, where one culture is the leitmotiv of nationalism.

Social stability and change

Third, President Hollande mulled over the resilience of the feudal order in India, albeit mutated away from ancient entitlements to merit based access to State resources, with family and clan networks, patrimony and inherited wealth as the currency of convening power. Quite like Africa he must have thought.

He smiled at the contrast between the muffler clad, “peoples”, Chief Minister of Delhi, Arvind Kejriwal, with his socks insolently peeking through his open sandals loping around to be noticed at the Indian Presidents party and the haughty power exuded by the powder blue, baby soft, finely embroidered Kashmiri shawl, wrapped around a seated Finance Minister Arun Jaitley, like an impregnable cloak of influence.

Give me some air please

Fourth, he coughed as he felt the the smog and pollution which had literally taken his breath away. Despite the chirpy commentary on Republic Day, which ignored the oppressive mist and spoke joyfully of the bright skies, he could smell the smog through the glass screen and feel one’s throat constricting. Nuclear power, the President thought, is what India needs and the French can provide.

Money, money, money…

Fifth, the business potential warmed President Hollande’s heart. But could French business, used to high margin deals and troubled with low cash reserves work in the price sensitive Indian markets. Indians worry about the cost of fuel whilst buying a Porsche. How, the President, thought, can I make French business nimble and lean like the Chinese or the cash flush Japanese who casually drop down investment in dollops of $10 billion. How to shake the French industrial aristocracy out of their complacence?

Instant graphics

Sixth, Hollande reflected over how good Indians were at escaping into selective retention- their movies, our politics, our social norms all pay obeisance to this particular facility. They have retained Gandhijis spectacles-on top of a tractor float, as a symbol but discarded the topi; simplicity; erudition and the open windows of his mind. They air brush reality at will. Goa, it seems from their float, is a paradise of saree clad Indians dancing decorously to undistinguished folk music. But is that is the culture more than 1 million Indians and foreigners go to see over Christmas and New Year! What about the week long carnival of eclectic music; 24X7 partying; food for the mind, soul and spirit and sociable company right there on the redolent beaches! How lucky India is, Hollande thought. If only he could similarly airbrush away France’s social upheavals with just one master stroke of graphics!

The soothing ambience of his air-home away from home, relaxed the President. His beguiling, spaniel eyes drooped in weariness. His horn rimmed, foreign made spectacles slipped off. As he turned over he surrendered himself to the muted, distant roar of a Lion electronically mixed into the soothing, lapping sounds of the waters of a swachh Ganga- must build bridges around water was his last thought.

Prime Minister Modi smiles whilst President Hollande strains to find a French aircraft in the fly past finale- Republic Day, New Delhi, India, January 26, 2016

A picture is worth a thousand words. Even the Oxford dictionary has conceded as much by admitting the emoji “tears of joy” as the first ever “pic-ord” which sums up the prevailing worldwide emotion of relief at even small mercies.

This emoji must have resonated with the 10 million employees and pensioners of the Union government as they read the generally beneficent recommendations of the Seventh Pay Commission presented to Union finance minister Arun Jaitley this week.

Coming as it does against the disturbing backdrop of faujis (Army veterans) having to resort to public agitations to get their due, the commission’s key objective seems to have been to soothe jangled sarkari nerves by adopting equity as the leitmotif of its recommendations.

Even recommending erosion of the pay “edge” enjoyed by the Indian Administrative Service (IAS) by making it available to all other Group A services, fits in well with this axiom. It mollifies the other cadres whilst giving ample opportunity to the IAS to retain its predominance by other means. After all they are the ones who write the rules today.

Equity – yes! but for whom?

But equity is an expansive concept spanning generations. How equitable, for example, are the recommendations versus citizens? Citizens have never been considered “stakeholders” by any of the commissions till now.

Prime Minister Narendra Modi, however, has different ideas. He wants IAS officers to go beyond the files and the political intermediaries who crowd around key government employees and to consult directly with people to know the truth. Incidentally, this was why district collectors in earlier times went on extensive tours and camped in villages. One wishes that the Commission had also followed this practice of consulting the intended beneficiaries of public services, instead of limiting consultations to only government employees.

Fiscal impact to crowd out public investment, as usual

The Commission assesses the direct fiscal impact of its recommendations at `1 lakh crore ($15.5 billion) per year on pay, allowances and pension for 10 million employees and pensioners. The unassessed indirect impact will be at least thrice this amount, since the ripple effect raises all public sector employees’ wages in state and local governments and those in the state-owned enterprises who number 12 million, excluding pensioners.

The question that 220 million households — comprising the rest of India who do not partake of this public bounty — are likely to ask is why should each of them pay an additional `4,500 every year to finance this splurge?

Government pay is already indexed 100 per cent to inflation and pension is similarly indexed substantially. Any increase in the “real” pay — after accounting for inflation — needs to be justified against additional or better work performed. There is no evidence of any such link compelling the proposed enhancements.

Most importantly, the additional burden is ill-timed. It is mere statistical jugglery to justify the fiscal burden (0.65 per cent of GDP) by pleading that it is less than the burden (0.77 per cent of GDP) imposed by the preceding Sixth Pay Commission a decade ago. Another argument is that the prospects for economic growth are bright, making the additional burden manageable. This is iffy reasoning.

The fiscal challenges faced by the government today are far more daunting than in 2009, when there were expectations of a quick rebound in world economic growth. Consider that the aggregate, cumulative loss of state electricity boards alone is around `3 lakh crores ($45.5 billion) which needs to be dealt with to improve electricity supply. Union minister of state for power, coal, new and renewable energy Piyush Goyal has taken a hard stand against the Union government bearing the burden without basic reform within these entities. This is the right way to go. If subsidies for the poor need to be narrowly targeted, so must “real” public sector salary enhancements, and that too only to reward the few performers in the vast government machinery and not spread equitably like largesse to all.

Link public pay enhancement to higher than targeted GDP growth

Given this background prudence dictates that even if the recommendations are accepted in-principle, actual accrual and pay out of these amounts should be graduated. An option to link pay enhancements with performance is to link their payout to GDP growth which is a specific, measurable, assignable, realistic, time-related specific, measurable, assignable, realistic, time-related (SMART) metric for aggregate government performance.

One obvious option is to use the existing proportion of emoluments to GDP of 2.77 per cent. This can be thought of as the “share” of Union government employees in GDP. A similar share can be justified for distribution of the recommended pay enhancements out of the actual additional value created above the GDP growth target.

Using this principle, for every 0.5 per cent of growth above the target (say 7.5 per cent instead of 7 per cent), the amount available in that year would be around `30,000 crore. This is less than one third of the assessed fiscal impact of the Commission’s recommendations. Once sufficient “additional” growth has been achieved — say over the next three years — the recommendations can kick in. Alternatively the implementation can be staggered annually. This forces government to perform before increasing the “real” pay of its employees. From the citizens’ point of view this is akin to hiring an auto rickshaw. You only pay after the driver has brought you to your destination — not in advance.

No ice cream without results

There is more evidence of excessive generosity. An assured annual increment of 3 per cent seems too generous for an inflation-indexed salary even though it is calculated only on the basic pay. Unearned annual increments should not be more than 1 per cent at best.

Fauji “pension edge” levelled yet again

The concern with equity has driven the commission to extend the principle of One Rank One Pension — granted by the government to the armed forces just prior to the submission of the Commission’s report — to civilians also. This is akin to compounding an earlier mistake. Levelling the armed forces’ and civilian pensions means taking away the “pension edge” which was so tenaciously fought for and won by the armed forces. The downside is that it may spark off a second round of fauji gussa (anger).

The Commission has done stellar work in sharing employee demographics for the first time. It has also laboriously listed an incredible 196 different allowances and worked meticulously to simplify and rationalise them by recommending termination of 52 and clubbing 36 others into other allowances. That still leaves 108 allowances to be dealt with later. The government would do well to heed the advice that fuller and more transparent budgeting of allowances is necessary.

But pay commissions, despite their expansive mandates, are not really expected to create a new architecture for public service. Their job is to shut the maximum number of mouths with the least amount of cash. The Justice Mathur Commission could have done worse. Thank God for small mercies!

Adapted from the authors article in the Asian Age November 22, 2015 http://www.asianage.com/columnists/it-s-rip-127

Nitish Kumar has decisively won the Bihar election battle, defying the national trend. Why he succeeded against the might of the Bharatiya Janata Party and Prime Minister Narendra Modi needs deeper technical analysis of the voting trends. But three lessons emerge.

Canny Bihari voters

First, Bihar, like Uttar Pradesh, is a cosmopolitan constituency. This sounds odd since these are poor “cow belt” states. The people of Bihar have traditionally been outward bound via migration. But unlike Punjabis, who are ready to mingle and put down roots in their new karam bhoomi (place of work), they remain rooted in their origins. Those who migrated from Bihar to Fiji and Mauritius in the later part of the 19th century retain close contacts with folks back home. Technology has made this easier.

photo: theindiandiaspora.com

Intensely aware, the people of Bihar were unlikely to be carried away by bombast from external BJP campaigners with nary a local leader in command. Bihar cannot be ruled from Gujarat, just as Gujarat cannot be ruled from Delhi. Note that Delhi-based BJP leaders, in sharp contrast to the average Bihari, behave like the absentee zamindars of yore. They are unashamed to publicly admit that the “Delhi durbar” is a one-way ticket. Once they get a foot in there, the presumption is they have risen “above” state-level politics. But neither Bihar nor Uttar Pradesh can be won by expatriate leaders.

Development wins votes

Second, unequivocally, inclusive development wins votes. Whilst Lalu Prasad Yadav’s Rashtriya Janata Dal has proved itself to be an equal partner in the combine, the victory clearly belongs to Mr Kumar. Yet again, as in Delhi, a broad acceptability across all identity groups — caste, religion, demographic and economic — has triumphed. This is a huge endorsement of the virtues of an inclusive election agenda rather than a divisive one (like that of the BJP’s).

photo: hindubusinessline.com

“Presidential” style local candidates win

Third, “presidential style” politics is here to stay. The election was fought and won around specific personalities whom voters knew and could identify with. Indeed, this was problematic for Mr Modi since the question was “Who is the BJP’s chief ministerial candidate?”

The BJP made the same mistake it did in Delhi, where it fielded its chief ministerial candidate in the waning hours of the campaign. By that time it was clear they were down and out. In both cases, the BJP has copied a favourite ploy of the Congress high command, which is to keep its cards close to its chest and “nominate” a puppet chief minister after the election rather than allow the candidate to directly demonstrate his/her electoral strength. This cost the BJP heavily in an election where, in sharp comparison, there was a ready, tested, well-known local leader in Mr Kumar.

Finally, has Bihar chosen well? Are they courting disaster by playing with “jungle raj”? Much will depend on how Mr Modi reacts to this defeat. If he is narrow-minded, seeks to punish Bihar for its decision and plays politics to undermine the Nitish government, Bihar is likely to be in for more of the same stilted development and under-achievement. However, Mr Modi can decide to be a statesman and view the Bihar verdict as a message that he is devaluing his reserves and his image by playing locally whilst the nation wants him to play nationally. Even from the narrow perspective of the BJP and its prospects, the last thing they want is to be seen as obstructionist or petty.

Nitish Kumar & BJP- juduva (conjoined) brothers in development

Mr Kumar is already playing with one hand tied behind his back, by the RJD. Till very recently Mr Kumar and the BJP developed Bihar in collaboration. They are, in fact, conjoined brothers in development. Mr Modi must rise above his personal feelings and go all out to support Mr Kumar to run a stable government and check Mr Yadav’s excesses. The enemy is Mr Yadav, not Mr Kumar.

RSS- out of step with the New India

The RSS must shed its growing image of a hardball-playing, narrow Hindu-vote-focused, quasi-political entity. Time was when the RSS was known for its social service and commitment to truth, honesty and self-sacrifice. Copying jihadi outfits that profess the same objectives but do not blink whist violently dividing India does not befit the RSS. Oddly enough, a failed state like Pakistan looms large in the minds of the RSS as a competitor to the glorious, continent sized country they call their own.

The Bihar election is a red flag for the BJP. For the sake of its own and national interest, a rational rather than an emotional approach is necessary. The people of Bihar have shown courage in braving the possibility of instability and “jungle raj” whilst opting for local leadership. This is an illustration of functional federalism. It would be unworthy of a national party like the BJP to seek to subvert this trend.

photo: the hindu.com

One of the “virtues” of under-development and poverty is that the stakes are low for courting political risks. Bihar has defied death earlier too, in colonial times. It has done so again. Mr Modi must work to increase the shadow price for political risk in Bihar with an eye on 2024. Wealthy voters are notoriously cautious and vote for stability. Ensuring a national presence for the BJP through 2024 means growing Bihar and Uttar Pradesh in the interim. Winning the war is more important than losing a battle. A good symbol of this new, high-minded approach to federalism would be if Mr Modi were to be present at the swearing-in of the new government. Actions speak louder than words. Let’s thwart Bihar’s death wish.

Like this:

Shared Dreams, Shared Destiny” screams the banner welcoming African delegates to the Third Indo-Africa Forum Summit. Forty heads of state are in attendance, along with dozens of ministers and 2,000 officials. Day one, Monday, got off to a shaky start. The press meet was termed a “damp squib” by one leading financial daily. Most delegations were absent disappointing the media which had to make do with our impeccably spoken minister Nirmala Sitharaman and her team of high officials.

Pre summit conference on trade with Minister Sitharaman

A 7.5 scale earthquake, shook Delhi in the afternoon but caused no damage. Hopefully the visiting “big men” and the solitary “big woman” — President Ellen Johnson Sirleaf of Liberia — will remember the demonstrated resilience of Indian construction, whilst deciding whether or not to go for a cut-price bid from China for their next project.

Day two had great press for Union minister for external affairs Sushma Swaraj, in a bright orange sari, with swathes of delegates draped around her.

Minister Swaraj has these big men eating out of her hands

Why South Sudan, which has more cows than people, sought help from India to improve its meat supply business, remains a mystery. It illustrates how limited is Africa’s association with India.

Fuzzy agenda

Unfortunately, the government remains woolly on what we want to do with Africa beyond importing their raw materials and exporting cheap machinery, cars, chemicals and pharmaceuticals to them. Indian business is way ahead of this strategy. It sees Africa as a popular investment destination given the ease of doing business there at higher margins. Siuth African President Jacob Zuma has already sounded the battle cry of “Make in South Africa”.

Doing Business Report pats Indian on the back

Fifteen countries, or one-third of the 49 African countries, with a 30 per cent share in Africa’s GDP, monitored by the World Bank’s Doing Business Report, rank higher than India. Mauritius leads the pack at rank 32 — ahead of Japan and Italy, followed by economic powerhouse South Africa and tiny Rwanda, which weathered its 1990s ethnic crisis spectacularly.

India ranks a low 130 despite frantic efforts to improve its rank from 142 last year. Of the African economies which rank lower, 50 per cent or 15 countries are classified as “fragile”. African governments are well ahead of us in the art of outreach to attract investment or doing international business.

Amitabh Kant the “go to” man for branding India

India’s democracy- only for marathon runners

Our next big “selling point”, from the Western perspective, is the democratic architecture of our country and its resilience since Independence in 1947. To be sure, there is much to be proud of. But it is doubtful if any of Africa’s “big men” and the solitary “big woman” will be attracted to our fractious democracy. Africans prefer order and discipline like a lot of Indians. They willingly barter personal liberties and freedom for the sake of their communities. Tribal bonds are alive and vigorous in Africa, much as caste is the leitmotif of India. The unhappy outcome of the Arab Spring, which unduly empowered citizen groups against the state, endorsed their strategy to retain an intrusive state to maintain order.

India is too big, too diverse, too individualistic and too “argumentative” for heavy-handed State regulation. Possibly, Africa could need a federative, “soft State” strategy, should they one day decide to form the United States of Africa. But for the present, we have few lessons for Africa on how to run a government. Why then, have so many top decision makers bothered to come? Here are my thoughts:

Is the new India for real?

First, Prime Minister Narendra Modi’s muscular outreach to the world has evoked intense curiosity. Foreigners are lining up to check if we are ready to walk the talk. Does reality match the hype? It helps that India has a global reputation for gorgeous shopping — the jewelry, the silks, the pashmina, the prêt-à-porter fashion wear, all available at competitive prices, not to mention the grandeur of Mughal and colonial India reflected in the many monuments in Delhi which are stunning to gawk at.

Jugaad and the very visible hand of God

Second, is curiosity, about an ancient land that is reputed to be managed directly by God, because doing so is beyond earthly skills. India is full of bad news, rapes, riots, hunger, poverty, illiteracy and poor services. And yet, it is the fastest growing economy in the world with a reasonable ambition of joining the “big three” or “the big five” over the next 10 years. Bung in the fact that government is hopeless at providing primary education, but arranges the kumbh mela (religious festival) annually at the Sangam in Allahabad for 100 million pilgrims over the space of a week, without a major disruption or incident and the role of divine intervention in keeping India going becomes clear.

We produce the full range of products from leather jootis to spacecraft which hover around Mars, with consumer durables, textiles, chemicals, pharmaceuticals, intermediate goods and industrial machinery also thrown in — not to forget the services provided globally by our IT companies. Yet 60 per cent of our people live below the $2 per day poverty line; just 3.2 per cent of Indians (middle class and above) own 64 per cent of the country’s wealth (Credit Suisse 2015). How we manage these contradictions, the “social noise” and the “political disruptions” is a miracle that many feel they need to “touch” to understand. And so they come.

Come, make friends in India

Lastly, and most importantly, heads of state come to India to build lasting relationships with a country which is non-threatening, well-meaning, gentle — at least by the standards of international realpolitik — and is slated to have a share of 10 per cent of the incremental world GDP by 2025 and 15 per cent by 2035.

Prime Minister Modi meets President Uhuru Kenyatta of Kenya

Selling products and arranging capital is what our private sector should be doing, not the government. After all, business is best placed to strike deals on both sides of the table. What our government needs to do is to paint in the details of the “Idea of India”, projected by Prime Minister Modi, as a focused, motivated country determined to claim, along with other developing countries, the second half of the 21st century as “our” own.

The Africans cannot be bowled over by pomp or ceremony. For them a Mercedes is merely a high-end taxi, not an executive limousine. What attracts them, instead, is the simplicity of life in India, the concern for high human values, even amongst our poor, combined with our earthy tradition of seeking “value for money” — well-known to them via our Gujarati expatriates. But if this fails to click, dancing to Congolese Rumba or the fusion Afrobeat also helps. Pity there is no joint Nolly-Bollywood event planned.